Age-restricted communities are on the rise, due in part to aging baby boomers and longer life expectancy. We are often asked about the requirements for maintaining an age-restricted community. As a general rule, the Federal Fair Housing Act (“FHA”) prohibits discrimination against families with children. However, exemptions were carved out to allow for age-restricted communities under the Housing For Older Persons Act of 1995 (“HOPA”), as long as certain requirements are met. In order to qualify as a legally recognized age-restricted community for the purposes of the FHA and HOPA, a community must demonstrate the following:

1. It is intended and operated for persons aged 55 and older;

2. It publishes and adheres to policies and procedures that demonstrate its intent to qualify for the exemption; 3. At least 80% of the units in the community are occupied by at least one person who is aged 55 or older; and 4. It must provide age verification of its members by reliable surveys, affidavits or other documentation.

If an Association does not comply with all of the above requirements, it will not qualify for the exemption under the FHA and HOPA. In addition, if a qualified age-restricted community falls out of compliance with any of the above requirements, it could lose its exempt status under the FHA and HOPA and could be subject to liability for discrimination based on family status. An Association attempting to maintain an age-restricted community without complying with these requirements could also be sued by its members for selective enforcement or failure to enforce. As a result, it is of the utmost importance that an age-restricted community properly maintain its status as such by demonstrating its compliance with the above requirements. For more information on how to maintain a qualified age-restricted community through advertising, document drafting, verifications procedures, etc., please do not hesitate to contact us.

We are often asked whether a professional Property Manager for an Association is considered a debt collector under the Federal Fair Debt Collection Practices Act. The clear answer to that question is . . . it depends. The Federal Fair Debt Collection Practices Act was passed to prohibit certain debt collection practices and to further restrict the actions of debt collectors who were engaging in questionable conduct. Under the Act, a “debt collector” is defined as any person whose principal business purpose is the collection of any debt or one who regularly collects or attempts to collect debts owed or due or asserted to be owed or due another. However, not all who collect debts are deemed “debt collectors” for purposes of the Act. For example, attorneys have been deemed debt collectors under the Act, whereas officers and employees of creditors are generally not. Therefore, a question exists as to whether or not a Manager working at the direction of a Board to collect an Association’s debt would be deemed a debt collector or not, as noted above. While there is no dispositive case law in Pennsylvania regarding this issue, a recent case captioned Angela Harris, et al. v. Liberty Community Management, Inc., United States Court of Appeals, No. 11-14362 was reported in the Eleventh Circuit. While only persuasive on the issue in Pennsylvania, this case is certainly informative. In this matter, a management company and the manager were sued for violation of the Federal Fair Debt Collection Practices Act. After years of extensive and likely costly litigation, the court ultimately decided that under the specific facts of the case, the manager was not a debt collector, but rather fell under one of the exceptions after applying the issues to their Planned Community state statute. In the case cited above, the manager and the management company were found to be not liable to the plaintiff. In one sense, they won the lawsuit. In another sense, did they really win given the amount of time, stress and financial resources that went into the lawsuit? In the case of Wright v. Ross, 2008 WL 190466, *2 & n.7 (M.D. Fla. Jan. 18, 2008), the court indicated in dicta that homeowner and condominium owners’ maintenance assessments might qualify as “debt” under the Federal Fair Debt Collection Practices Act. While this case does not explicitly state that the manager and management company would be considered “debt collectors” for the purposes of the Act, it evidences a step in this direction. As such, it is important to review your collection practices on behalf of Associations in order to bring them into compliance with the Federal Fair Debt Collection Practices Act. By reviewing your procedures and assuring they are in compliance with the Act, you may reduce the risk of an action being filed against you and your company and reduce the risk of a negative outcome. Should you have any questions regarding this article or your collection practices, please do not hesitate to contact us.

Over the years we have been approached by Associations who believe they may have a registered sex offender residing within their community. By “registered sex offender” we generally mean a person who, because of past involvement with the criminal justice system for offenses of a sexual nature, is required by law to register with the authorities and provide certain information as to his or her whereabouts. The Association may become aware of this person’s presence by word of mouth; however, in certain cases, information about the person is posted in the area. In any event, when the Association becomes aware of the presence of a registered sex offender, and turns to us for advice, the two questions typically asked are:

1. Is it true? That is, how can we verify that we have a sex offender living in our community? and

2. If it is true, now what?The very fact that an Association becomes aware of a sex offender’s presence in the community in the first place is likely the result of Pennsylvania’s “Megan’s Law”, which requires registration and community notification of convicted sex offenders.

The first “Megan’s Law” was passed by New Jersey in 1994 after the tragic circumstances involving seven-year-old Megan Kanka. Other states, including Pennsylvania, followed suit shortly thereafter, passing their own versions of Megan’s Law. The centerpiece of Pennsylvania's Megan's Law is the requirement that the Pennsylvania State Police create and maintain a registry of persons who have either been convicted of, entered a plea of guilty to, or have been adjudicated delinquent of, certain sexual offenses either in Pennsylvania or in another jurisdiction and reside, work and/or attend school in Pennsylvania. The registry of such persons is found on the Megan’s Law portion of the Pennsylvania State Police website, the web address of which is http://www.pameganslaw.state.pa.us. This website contains a useful search tool, as well as, details pertaining to individual offenders.

With the above website in mind, Associations now have the tool to verify whether a registered person is living in their community. We now turn to the issue of what, if anything, should the Association do. From a purely legal perspective, a registered sex offender has served his or her court-mandated sentence and has been released from custody. In fact, any visitor to the Pennsylvania State Police Megan’s Law website noted above is presented with a warning stating that any person who uses the information found on the website to threaten, intimidate or harass a reporting person, or his or her family, or who otherwise misuses this information, may be subject to criminal prosecution or civil liability. While our advice to Associations depends on the specific facts of each situation, generally speaking, the mere presence of a registered sex offender living in a community with no other negative interaction does not require any action from the Association’s Board of Directors. Again, the facts of each matter and the Board’s specific concerns must be evaluated on a case by case basis.

If you have any questions or concerns regarding the above, please do not hesitate to contact our office as we would be happy to review your matter and advise you accordingly.

The transition process typically begins when the Declarant-run Board of Directors is replaced by Directors elected by the unit owners. However, transition is not simply the transfer of leadership. This critical process continues as the newly elected Board starts to identify and preserve any potential claims that the Association may have in connection with the physical conditions of the common element property, the financial condition of the Association, and the management of the Community.

One of the first actions a newly elected Board of Directors typically undertakes is to hire independent and experienced legal counsel to coordinate the transition process. Legal counsel can assist the Association with identifying and securing all documentation relevant to the creation, construction and operation of the Community from its inception to the turnover of control to the Association. Additionally, it is the newly elected Board of Directors’ responsibility to determine whether the common element property has been turned over to the Association in the condition promised by the developer. In this regard the Board will often retain an independent professional engineer to conduct a thorough inspection and evaluation of the property for defects and/or deficiencies in the construction of the Community. In our experience, legal counsel’s coordination with the Association’s engineer is essential; counsel can ensure that the engineer understands the warranty provisions applicable to the property, and they can evaluate the findings of the engineer to determine whether the Association has any claims for the defects and/or deficiencies identified by the engineer. Legal counsel also assists the Board in evaluating the Association’s financial condition which may include the hiring of an independent accountant to determine whether all required capital contributions and all regular assessments owed by the developer have been paid as well as whether all expenses paid out of the Association’s account were expenses of the Association as opposed to the Developer’s expenses.

The results of the inspections and analyses conducted by the Association as part of the transition process must be evaluated by the Association to determine whether there are any potential claims which the Association should be pursuing on behalf of the Community. While it is always the Association’s goal to resolve matters amicably with the Declarant, to the extent the Declarant fails to correct the construction defects and deficiencies identified by the Association, otherwise breaches its obligations to the Association, or is uncooperative with respect to the transition process, litigation may be the Association’s only recourse. Multiple questions arise as the Association navigates through the transition process. What are the Association’s damages? Who is responsible for the damages? What is the likelihood that the Association can recover the damages from the responsible parties? Does the Association have the right to pursue a claim for such damages? What is the statute of limitations for pursing such claims? If the Declaration does not correct the defects, who will bear the costs of repair?

All of the foregoing issues should be carefully evaluated by the Board and its legal counsel. The Board must weigh the costs of pursuing such claims against the cost to the Association and its unit owners should they choose to correct the defects themselves. While the transition process may be time consuming and often requires the Association to make certain expenditures, our experience has clearly demonstrated that the Association’s failure to properly evaluate the overall condition of the Association can be much more costly in the long term. In the latter event, not only will the unit owners ultimately have to bear the costs of correcting the defects that should have been the responsibility of the developer, but the newly elected Board may find themselves exposed to liability where the prompt identification and assertion of such claims would have protected the interests of the Association and its unit owners.

If you have any questions about the transition process for your Association, contact Adam Marcus or Keely Carr at Marcus & Hoffman.

By providing rules and regulations on everything from pets to holiday decorations to fitness center protocol, the governing documents of an Association represent the overall standard for what is expected from unit owners while living within an Association. What happens when a unit owner violates the governing documents? Does your Association have a clear and well-articulated policy outlining exactly what recourse the Association has against an offending unit owner? Oftentimes I am asked why a Fine and Enforcement Policy is needed when the Association's governing documents state that the Association is entitled to issue "fines". Ultimately, a good Fine and Enforcement Policy will help the Association ensure that the governing documents are uniformly and consistently enforced. This in turn will help protect the Association from claims of discrimination or selective enforcement. A Fine and Enforcement Policy is designed specifically to provide a procedure for the Association to follow in each instance where a violation of any portion of the governing documents occurs. The Policy is intended to consolidate provisions that are often scattered throughout the governing documents into one concise location. The policy will help ensure that your Association does not make the mistake of imposing a fine without first providing the unit owner with notice and an opportunity to be heard. The policy provides specific notices, time frames and enforcement procedures while also potentially allowing the Association (where allowed under the governing documents) to restrict access to certain amenities or other privileges. Furthermore, the policy may identify interest on past due balances and, if desired, provide for a specific fining schedule for individual occurrences as well as per diem fines for continuing violations. It is important that each Association have a Fine and Enforcement Policy that is tailored to their specific governing documents since each Association is unique. When effectively drafted, a Fine and Enforcement Policy becomes an important tool in Court when necessary to collect any outstanding fines or charges from unit owners. Overall, instituting a well-drafted Fine and Enforcement Policy may significantly limit the amount of hurdles an Association will have to jump over in the future.

Unfortunately, mortgage foreclosure actions are a regular occurrence in many of our communities. You may receive a notice of mortgage foreclosure on behalf of the Association or learn that a bank is and/or has foreclosed against a unit in your community. Generally speaking, a mortgage foreclosure sale extinguishes all liens which are second and/or junior to the foreclosing party's lien unless specifically preserved by statute. Fortunately, the Pennsylvania Uniform Condominium Act and the Uniform Planned Community Act are two of those statutes. The Pennsylvania Uniform Condominium Act and the Uniform Planned Community Act each contain provisions which protect at least a portion of the Association's lien against a unit when the unit is the subject of a mortgage foreclosure action. The assessments which come due during the six-month period immediately preceding the date of the mortgage foreclosure sale are not extinguished and continue as a lien against the property unless such assessments are paid out of the proceeds of the foreclosure sale. Accordingly, the Association is entitled to the collection of those amounts incurred during such six-month period despite the Sheriff's Sale of the property. As part of the collection of the Association's lien against the unit, we typically prepare appropriate notices to the Sheriff and the foreclosing attorney prior to the scheduled sale putting such parties on notice of the Association's potential lien against the unit being foreclosed upon. Once the foreclosure sale has been completed, the Association needs to reconcile the account history and determine the amount of the outstanding lien against the unit. Reconciliation of the account history can be complicated and requires careful attention to make certain that the Association is not misrepresenting the amount owed to it. The collection of the outstanding lien depends upon whether the property was sold to a third party or taken back by the bank. Careful attention should be given in determining the new owner of record after the Sheriff's Sale to ensure that the Association is communicating with the proper party in connection with the collection of the outstanding lien against the unit. To the extent the property is sold to a third party, the Association may look to the Sheriff's office to collect the lien through the distribution process. To the extent the property is taken back by the bank, the Association may pursue the collection of the lien via the foreclosing attorney and/or directly against the bank as the new owner of the unit. With respect to the balance of an Association's lien which is not protected by statute, such lien is extinguished against the unit only. However, the prior unit owner remains personally liable for such amount. This means that the Association may be entitled to pursue an action against the prior unit owner for the balance of the lien (i.e., the difference between the total outstanding delinquency and the six-month portion of the lien). At the very least, the Association should consider securing a judgment against such former unit owner for the balance to preserve its right to collect the same in the future.

Automated external defibrillators (AEDs) are now found in a rapidly growing number of locations for use by non-healthcare professionals. AEDs are small devices which are meant to help treat victims of sudden cardiac arrest - one of the leading causes of adult deaths in the United States. Should your Association consider having an AED available for its pool area or clubhouse fitness center? Quick access to an AED can save lives and, as a result, laws mandating their installation in public venues have become more common. There is currently no law in Pennsylvania that mandates the installation and/or placement of an AED in private buildings, health clubs, private pools or residential communities. Because of their benefits, however, there is the argument that AEDs are the right thing to do for the Association notwithstanding the potential for a lawsuit. If your Association is considering acquiring an AED, there are certain requirements that the Association must meet in order to avoid liability for its potential failure or misuse. The Cardiac Arrest Survival Act, 42 U.S.C. §§ 238p and 238q, provides AED operators with conditional Good Samaritan legal liability immunity for any harm resulting from the use or attempted use of an AED. An Association would receive immunity if it follows the below identified guidelines:

Properly notifying local emergency medical service agencies of the presence and location of the acquired AED(s);

Properly maintaining and testing the AED(s); and

Providing appropriate training to expected AED users.

Similarly, the Pennsylvania AED Good Samaritan Act, 42 Pa.C.S.A. § 8331.2, provides civil immunity for trained users of AEDs and requires that "expected users shall complete training in the use of an AED . . . .", 42 Pa.C.S. §§ 8331.2(a), (c). Pursuant to the AED Good Samaritan Act, an Association would receive similar immunity only if the Association:

Ensures that expected AED users receive training from the American National Red Cross or the American Heart Association or through an equivalent course of instruction approved by the Department of Health; and

Maintains and tests the AED according to the manufacturer's operational guidelines; and

Provides instruction requiring the user of an AED to utilize available means to immediately contact and activate the emergency medical services system; and

Assures that any appropriate data or information is made available to emergency medical services personnel or other health care providers as requested.

To date, there are relatively few lawsuits that have arisen directly involving AEDs. Associations considering acquiring an AED should design and maintain an AED program as a way to manage liability risk. We encourage you to discuss this issue with legal counsel in order to avoid potential future litigation.

All Associations should have a separate Fine & Enforcement Policy in place to provide for notification of violations and for informing unit owners of specific fines and the appeals process for receiving a notice of violation. Implementing a Fine & Enforcement Policy encourages unit owners to comply with the Association's governing documents and provides for the uniform enforcement of the Association's documents. The Pennsylvania Uniform Planned Community Act and the Pennsylvania Uniform Condominium Act both allow for Associations to impose and collect fines in the same manner as assessments. Notice of a violation with the opportunity to be heard by the Association must first be provided to the violator. Failure of the violator to pay the fine may result in a lien against the unit. The Association, if it wishes, may then proceed with filing a lawsuit against the violator for failure to pay the fine. When applicable, the Association may collect reasonable attorneys' fees and costs from the violator for the costs associated with the violation. A Fine & Enforcement Policy that is separate and apart from the Association's other governing documents can outline with greater specificity and supplement what may already be provided for within the Association's Declaration. In most cases, such a Policy provides an outline of fees that the Association may impose upon a unit owner for failure to comply with the Association's governing documents. The Policy may also outline a specific notice and appeal process for the Association to abide by when enforcing its documents. Not only does having such a Policy assist the Association in enforcing its governing documents uniformly, it provides notice to the unit owners that certain actions may be taken by the Association for failure to comply with the governing documents. A separate Fine & Enforcement Policy can assist Associations in ensuring greater compliance of their governing documents as well as the implementation of uniform enforcement procedures. If you have any questions about preparing a Fine & Enforcement Policy specific to your Associations please feel free to contact us.

The weather is finally changing. The landscapers are doing a great job and the property looks fantastic. You are working hard and are on target to have the pool open for Memorial Day. Life is good! Then you overhear one of your coworkers talking about a dispute they had at their property last year concerning the pool. You learned that the Board had passed a rule prohibiting children under a certain age from using the pool. Several families within the community with young children said the rule was illegal and discriminated against families with children. The Board countered that the purpose of the rule was for safety reasons and to keep children who are not potty trained out of the pool. Being proactive, you go and review the policies and rules for all of your communities with pools and learn that many of them have no policy regarding this issue or have similar rules prohibiting children under a certain age. You are concerned that your community may face a similar problem this summer. Now that you think of it, you remember hearing something about a recent law that was passed on another pool related issue. Something about assuring that the pool drains comply with certain safety requirements. It is amazing how quickly your "to do" list can grow. If one or more of your communities has a swimming pool, we recommend that the Board conduct a careful review of the rules and policies in place pertaining to the use of the pool. Swimming is a wonderful activity, but it is not without risks. We recommend you have your association's legal counsel review its policies and procedures to maximize the use and enjoyment of the pool while minimizing liability exposure to the association. Should you have any questions regarding your association's policies pertaining to pools or other recreational activities, please do not hesitate to contact us at your convenience.

In last month's newsletter, we discussed tips on how a Manager and Board may secure a contract that best protects the interests of the association. However, what if your association has already entered into a contract with a vendor who has strayed from its' obligations or the association wants out of a contract for financial or other reasons? Your association may be able to claim that a contract is void due to noncompliance of the Pennsylvania Home Improvement Consumer Protection Act (HICPA). HICPA, which became effective as of July 1, 2009, mandates the form and content of certain contracts. HICPA applies to contractors who perform over $5,000 of home improvement business annually. "Home improvement" is defined broadly and includes contractors who engaged in work, such as the repair, replacement, remodeling, removal and renovation of items such as driveways, swimming pools, roofs and siding. While HICPA does not apply to landscaping services in all cases, it does apply if a landscaper is involved in providing certain other services, such as those mentioned above. Specifically, landscapers will fall within the purview of HICPA if they are involved with lighting systems, non-decorative fences, concrete walkways, windows, doors or the installation of retaining walls, fountains or drainage systems. HICPA mandates a significant number of requirements for home improvement contracts and also provides a list of provisions which, if included in a contract, will provide the consumer (i.e., the association) with the ability to void a contract. Therefore, if the contract form that a business has been utilizing does not contain required information, it should be revised. For example, HICPA requires that all contracts contain the contractor's registration number with the Bureau of Consumer Protection and identify that the contractor agrees to maintain insurance. Additionally, HICPA prohibits a contractor from including a provision within a contract allowing for an award of attorneys' fees and costs; although the consumer still has the ability to receive attorneys' fees and costs. While HICPA's applicability to associations has yet to be tested, it is likely that it does apply to association contracts, as it is designed to provide a consumer with the above protections and beyond those set forth in Pennsylvania's Unfair Trade Practices and Consumer Protection law, which does apply to associations. As such, you may wish to have counsel review your contracts to ensure compliance with HICPA, particularly if your association has an interest in voiding or revising a contract with a vendor.